A crash course on measuring ROI
Before making any IT investment, identifying the value of ROI is important to clearly demonstrate the financial gains of the proposed project, compared to the relative cost.
The metric is so important that more than 80% of companies typically do an ROI calculation prior to approving IT projects costing $50,000 or more.
The ROI calculation is valuable because it creates a ratio between the expected net benefits of a project in relation to its costs, one that the team can use to compare to other proposed projects and against internal investment goals and criteria.
Although ROI is a great summary financial metric for assessing and measuring project viability and performance, it should be used with several other financial measures including NPV, payback period and internal rate of return calculations.